USA: Constellation Brands posts upbeat Q2 sales and raises full-year outlook
Constellation Brands, the beer maker betting on the marijuana market, raised on October 4 its full-year earnings outlook and posted upbeat second quarter sales driven by strong demand for its Modelo and Corona brews, the Financial Times reported.
The company raised its outlook for adjusted fiscal 2019 earnings to a range of $9.60 to $9.75 a share, up from $9.40 to $9.70 previously. This excludes benefits from its additional $4 bln investment in Canadian marijuana company Canopy Growth in August.
The rosy outlook accompanied upbeat quarterly sales, which jumped 10.1 per cent from a year ago to $2.3 bln. That topped analyst expectations for $2.25 bln, according to a Thomson Reuters survey of analysts.
Beer sales grew 10.5 per cent from a year ago with the company noting that its business was the biggest share gainer in the US beer industry while wine sales were up 9.3 per cent.
Net income more than doubled to $1.15 bln, or $5.41 a share, in the three months ended in August, up from $501.6 mln, or $2.30 a share, in the quarter last year. Adjusting for one-time items, earnings of $2.87 a share topped expectations for $2.59 a share.
The double digit EPS growth we delivered in the second quarter is top-tier for consumer product companies, said chief executive Rob Sands.
Constellation remains the high-end leader and the most significant growth contributor in the US beer market, and were seeing strong growth trends for the super-premium plus segment of our wine portfolio.
Constellation has doubled down on its bet on the emerging cannabis market, boosting its stake in Canopy Growth in August, as more than a dozen countries have legalised medical marijuana and several others are evaluating decriminalising weed consumption. While it is still illegal under US federal law, nine states have approved recreational use.
A number of beverage groups have been exploring this market, with Coca-Cola saying last month it is examining the market for cannabis-related products amid slowing consumption of its core range of soft drinks.
Constellation Brand shares, which were down nearly 8 per cent year-to-date as of October 3 market close, were up 4 per cent in pre-market trade.
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